tv Worldwide Exchange CNBC February 25, 2010 4:00am-6:00am EST
welcome to "worldwide exchange" on cnbc. in the headlines, toyota once again in a focus after the company's president says he is deeply sorry for safety lapses or promises. meanwhile, here in europe, rbs posted losses, says the worst may be over. credit agricole says it's upbeat for this year. >> in the united states, the spotlight shines today, ben bernanke is back on the hill and president obama's high profile health care summit. >> hello there. a warm welcome to "worldwide exchange." it's chloe cho in asia where it's just past 5:00 p.m. in
singapore. a similar scene that we saw as yesterday, of course, investors picking up on bernanke's comments. going forward, could be weak. of course, we had some weak housing numbers, as well, along with disappointing consumer confidence this week. take a look at the damage report. the yen is not helping. nor are the toyota woes. the hang seng, slightly off the shanghai composite. we did have the auction yield on three-month bills along with one-year bills earlier this week that left those yields unchanged. a lot of investors seem to be thinking that perhaps this could be a sign the pboc is taking it easy as far as tightening is concerned. as for the other markets, the kospi down 1.6%. the bombay sensex is pretty much right along the flat line and the aussie market lower by 1.2%,
back below that key 4,600 level and take a look at the ftse cnbc global 300, down 0.5%. good morning, ross. nice to have you back. >> thanks for that, chloe. it's fairly neutral. stock levels in terms of the indices aren't doing very much. we're pretty flat across the ftse, xetra dax, the smi. the cac 40 is a little lower. but a huge number of stocks reporting today. a couple of the major winners, basf, the german chemical company, that stock up 4%. we've got telecoms up this morning. a little bit of the weakness this morning coming through in the likes of rwe, a tobacco company is a little weak on the divens side, as well. we're going to dig into all individual stories in our global stock watch, so you won't miss out. nicole, very good morning to you. >> welcome back. it is just after 4:00 in the morning in the united states.
this is how we're expecting markets to open. lower across the board. of course, after shrugging off terrible housing numbers yesterday and rebounding with the fed discussion on the hill, that will continue again today. the dow is down 38 points below fair value, nasdaq down about 7 points below fair value and the s&p is hovering about 5 points below fair value. chloe. >> joining us now is linda yuan, fellow at oxford university. i want to ask you your thoughts about the way the asian markets reacted to ben bernanke's comments today. what was seen as a market positive for participants on wall street, ininvestors are thinking perhaps this is an indication that growth is going to be weak going forward and a lot of investors bailed out. what are your thoughts? >> i think on the next basis, it's not surprising that growth
is going to be weak so, therefore, it is good news that they're going to keep interest rates low. they'll continue to stimulate the economy. as you know, most of the asia relies in the united states as their main export market. so i can imagine that some market participants will be hearted. i think those who are disappointed probably are expecting more of a strong recovery but i don't see that in the cards. >> linda, this is nicole lapin in the united states. do you think there is going to be more emphasis on economic reports as markets seem to shrug off up terrible reports earlier this week? >> i think they'll be watching very closely to see whether or not the u.s. economic data, this kind of jobless recovery we're all talking about. so if you look across major economies in europe, even in
japan, pretty much these countries have recovered just as the united states did in the third quarter last year and they promptly took a dive when the government report was withdrawn. so this double dip scenario was something everybody will focus on in the united states. the u.s. brings the global economy down with it. >> okay. linda, you're sticking around. royal bank of scotland shares are down. despite a jump in bad debt, the bank says they may now keep investment banking where it is. investors have more rooms for a cautiously encouraging outlook for 2010. steven hester, ceo of rbs will be on "squawk box" a little bit later. he will, of course, be on the web. credit ago recoal had fourth quarter profits up to 43 million
euros. there was 349 million a you're ago. fourth quarter net losses were hit by its greek unit. they are not concerned by the greek government's debt problems. the bank is optimistic saying that national 2010 trends indicate that all of the group's emphasis on prmping fairly well. and, again, there's an exclusive interview with the ceo of credit agricole. that's on closing bell, as well. of course, that will also be on the web, as well, cnbc.com. linda, rbs says, look, we're through the worst, but it's going to be a fairly hard slog. what are the ramifications for the rest of us? >> we rely on the banks because they provide credit, which is
the live line for businesses and for homeowners. and i think the rbs story is a very good example of why we're in this crisis. so they're reporting better than expected loss figures. the market expected about 5 million and they've come in at about 3.5 billion. the more important figure is their impairment costs. now, whether or not it's peaked is a question for financial sectors. we expect this stageñq recession to get prope% losses, credit card losses, especially in a country like britain. all these things, as we look across europe, if they have peaked, then we're over the worst of it and we can sort of ride this out. but if they continue to linger,
the euro zone figure is down. that means money supply is down. >> we've just confirmed the euro zone figures are up 1% on the year. the month-on-month average is still at 0.1%. also, there's very poor housing figures in the united states. bear in mind, the global crisis started with u.s. housing. we're getting reports that people are throwing in the towel, even though they can afford the mortgages, they're so much under water, they're throwing in the towel, anyway, and saying it's now sound advice to walk away from the mortgages they can afford. >> i think this is why the entire credit story is going to continue to run. american mortgage holders can't just walk away. there are not that many consequences and this, of course, leads to more impairment losses and where the u.s. has record record foreclosures on houses as well as having numerous banks being bailed out
in a sense by having the fdic, having deposits taken care of. if you look at new home sales, that's disappointing. but all of this should rather be expected because we know the housing crisis is not yet done. of course, this is why. have we peaked on the toxic assets? that has to be the key questions. the u.s. data makes us think there might be more to come. >> let's get you some of the big stories we're following in the united states now. fed chairman ben bernanke is back giving part two on the economy and monetary policy. he goes before the senate banking committee at 9:00 a.m. new york time. economists believe that the u.s. housing market and jobs markets haven't improved very much and consumer confidence has been worsened. bernanke will avoid mngzing the timing of a rate hike. he told a house panel on wednesday that rates will
continue to remain low for an extended period. this is coming at the same time that president obama will square off with lawmakers today in a last ditch effort to salvage his health care reform plan. republicans and democrats will meet at the blair house for a nationally televised health care summit beginning at 10:00 a.m. leaders will discuss four major themes, controlling costs, insurance reforms, cutting the deficit and sxabding health care coverage. treasury secretary timothy geithner meeting with financial industry groups today at 11:00 a.m. new york time and this comes as it's said the obama administration is close to saving a reform bill. reports say geithner met with bankers on wednesday night to discuss the matter.
>> toyota closed down 0.2% after staying in positive territory. overnight, the company's president apologized to u.s. congress and millions of toyota drivers over its recent safety issues. and speaking to employees after the hearings, an emotional toyota thanksed them for their support. >> at the hearing, i was not alarmed. america around the world, but they are with me. >> the pledge to overhaul the way the company handles complaints and recalls going forward, he also dismissed any fault with toyota's electronic system saying he was certain there is no design flaw. back to you, nicole. >> and celebrities, chloe,
should lead clam russ times. and hoaxes that plague even the savviest of investors. check out our slideshow at cnbc.com to see some of the world most famous celebrity scans. there you go, ross. >> what is a celebrity scan? >> i am not sure, actually. i think that looks like a shoe scam of some sort, maybe that shoe was way too expensive. >> we'll move on. still to come on the program, we've had an avalanche in europe this morning. find out how the company shares are iraqiing this morning. before that, quick reminder of where oil is trading down, just below $80 a barrel.
are concerned this morning, futures opened higher. the yield on the 10-year has nudged down, getting a bit of a boost. markets react to comments from rating agencies. they may downgrade it another notch. the treasury debt is up in asia and it yields on the 10-year treasury note ticked down to 3766%. the fed chairman for mr. bernanke suggesting rates will reemphasize the rates or stay low for a long period of time. but that changed their view on that at all. anyway, there we go. currency markets, we've got a lot going on there, particularly with the yen and the euro. chloe. >> so the euro/yen handle currently at a one-year low. and a lot of shaky movements involving sterling, as well. take a look at sterling/dollar, 1.52. down 0.8%. that's more than a nine-month low versus the dollar. and you have an 11-month low for
sterling against the yen, as well. and take a look at how risk aversion is taking shape. dollar/yen back below that 90 handle at this hour at 89.36. the euro/dollar, 1.3478. euro/sterling, 0.8816. you could probably get more cues as ben bernanke is going to speak again and let me toss it over to nicole. >> chloe, u.s. investors in a pair of economic reports before the opening bell. weekly jobless claims are out at 8:30 a.m. new york time forecast to drop to a total of 460,000. at 8:30, durable goods will be released. demand for big ticket items expected to jump by 1.5%. cleveland fed president pianalto speaks about the economy and small businesses in dayton,
ohio. the blackstone group reports earnings before the bell as do dr. pepper, snapple, heinz, retailer kohls and newmont mining. jpmorgan hosts investor day today. apple also, on the other coast, holding its annual shareholders meeting at the headquarters in coopertino, california. at 1:00 p.m. investors will get a chance to hear from ceo tim jobs, coo tim cook as apple gets ready to release the new ipad device. >> okay. european stocks, nicole, are pretty flat on the indices. the xetra dax is down 0.12%. cac 40 do you know 0.14%. smi down 0.25%. just about every market here in london, we're very much focused
in rbs. rebecca is here to tell us how the market are reacting. rbs is one of them. is shares of this company are higher by over 6% today and they've taken lloyd's with them, as well. rbs is one of the majority state-owned banks here in the uk. they came out with a 2009 loss of 6.2 billion pounds, which is a bit narrower than the loss we've had in the previous year. they came out for crucial comments, as well and that is helping the shares of that company, as well. in terms of the outlook, they say they are cautiously encouraged by the outlook. so the shares of that company are doing well as they're taking lloyd's with them. centrica is a big gainer, too. bear in mind, this company is the biggest household energy supply in britain. so it has a pretty good feel for what's going on.
operating profit did fall, but it beat expectations. the company hiked its dividend and that's helping to add shares, as well. >> on the down side, though, baxton haze? >> yeah. a couple of stocks have taken a hit today. british american tobacco, they told us the worst is over for their business. and the earnings match expectations, too. but they pointed out that unemployment is a big driver for their business or employment, i suppose, is a big driver for their business. if unemployment is seen continuing to gain in some of the key markets, that could be something to be aware of in the next few periods, too. and haze, as well, they've seen a drop off in plant.
>> thanks very much, indeed, for that. over in frankfurt, we've got a number of stocks out there. patricia has the stock reaction to the news. >> absolutely. one is doing very well, ross. the other one, not so well. on the back of the numbers, much better than expected. and it seems that there won't be a big comeback in terms of the chemical sector in europe for 2012. however wibt seems what they do in pricing is turn over, well balanced out with their asian business, specifically the chinese business. they're still paying more than what analysts expected. so all in all, i think the numbers were much better than expected on the operating level
as well as on the net levels. so that stock is really being rewarded for that. what they're talking about is they're talking about a sharp decline in electricity and gas prices, something that none of the shareholders wants to hear, down about 2% as we speak. they're cutting the dividends by 1 euro to 3 euros 50 for 2009, ross. >> and patricia, we've heard from france telecom today. i wonder what's happening with them, too. they have turned around. they were first of all falling on the back of what i thought were in line, disappointing numbers. so when it comes to the loss for the fourth quarter, we expect
the net profits to be booked. but that didn't happen. never mind. the stock did turn around a little bit as we see. they're being traded up about 9.53 euros right now. what i thought was interesting, though, is with regards to their dividend policy, not only they're keeping the dividends for 2009 in european shares, but they've promised for the next two years 77 cents a share minimum. so maybe they want to schmooze the shareholders in the long-term, ross. >> thavngs for that, patricia. there's a lot of financials that have reported, as well. stephane has the details. >> the greek unit was not concerned by the country's debt problem and they're still on track to break even in 2011 and credit agricole has no plans to sell it. the bank says that all praises are performing well based on the
early indications for to 10. the ceo is confident about the future, although the level of provisions is going to remain in 2010. that being said, the numbers for the last quarter were a bit weaker than expected and also for the revenue which was slightly below expectations. we have numbers from natixis, net profits of nearly 750 million euros for the last quarter. that was way below the average forecasts. illustrate has identified the wrong 6 million euros by signage. the stock is up 3%. on the downside, still, dexia, the bank posted what the bank returned to profit in the last quarter, but it was a weaker than expected net profit for the fourth quarter. capital yapal gains are the main reason for the profit for the last quarter and that's the
reason why the stock is performing negatively. >> that is a financial step. and what about france telecom? >> same as in germany. the stock was a bit weaker in openings today. the net profit is up $3 billion euros. but the company confirmed its financial target for 2010. the revenue is going to remain stable. the company confirmed a target of 8 billion euros of free cash flow and the cap x-rate will be around 12%, plus for france telecom, the company confirmed the new ceo of france telecom next month monday and that would probably lead to some changes in the strategy of the company. ross. >> okay. stephane, thanks very much indeed for that. and you can see that on closing bell at 700 cet. if you don't get that wherever
you're watching krvenz, you can get it on the web cnbc.com. and cnbc online, as well. let's check in with linda yueh, from oxford. linda, help us understand what we're seeing in china today, the auction yield for a three-month bill is unchanged. just the few days ago, they did the same with one-year bills. this after a triple r hike three fridays ago. do you get a sense that we may get more tightening by the pboc in the run up to the event, the big event of the national people's congress and also some announcements during the event because right now, the way the hong kong markets are reacting to tightening and also the shanghai markets are in completely different ways. >> yeah. depending on how it is that they're viewing the titan measures, it all comes down to is that groekt going to slow? and i think what is actually happening at the moment is it's
more of the latter. china isn't going to slow its growth, but it's going to be much more targeted in how it tightens. so in other words, instead of raising reserve requirements or raising the base interest rates, which could slow growth, they're telling the banking system to look at the loans on its books, refrain from issuing loans to local governments which are only backed up by promises of fiscal revenues in the future in an attempt to try and present bad debts from building up and too much credit expansion going to inefficient uses. now, this kind of micromanaging only works in a state of banking system and even then, i fear that there may still be some doubt as to how effective it could be. remember, tlol state owned banks are still run by local government. but they certainly are trying to fine tune and not to cause markets to become very worried about chinese growth this year. >> okay. paul is there. still to come on "worldwide
sorry for promise safety lapses and promises to change the way complaints are handled. here in europe, rbs has posted a loss and credit agricole says it's upbeat for this time of year. >> on the united states, ben bernanke is back on the hill and president obama's high profile health care summit. >> hello. you're watching "worldwide exchange" with nicole lapin, chloe cho and i'm ross westgate. the ftse cnbc global 300 is down 2 2 points. most of those losses came during the asian session. we're pretty flat, really. but there is a huge number of losses and they are trading very differently. what about what's going on in asia? >> a weaker picture here in asia, once again today, ross. it's just past 5:31. as you can see, a lot of red
arrows across the board on top of ben bernanke's comments and about the extended period of time of interest rates. a lot of investors seem to take that as a sign that we could be seeing weak growth going forward. plus, we had terrible numbers from the u.s., as well. the hang seng off, carrying on two sessions of gains. property counters were some of the best performers today. and that was in part because of reports that state regulators are going to start approving equity fund-raising again after an eight-month extension. the kospi down 1.6%. the aussie market lower by 1.2% asterisk comes off the table. the bombay sensex pretty much on the flat line. nicole, good morning. >> very good morning to you, chloe.
here is how we're expecting markets to open. across the board, lower by about 35 points. s&p 500 futures about 5 below fair value. all eyes are going to be on capitol hill again today with more testimony coming out of fed chairman ben bernanke and, of course, that high profile health care summit, ross, that the president is putting on. >> nicole, just got a little bit of data here out of the uk which we should bring your attention to. fourth quarter 2009 business investment, minus 5.8% quarter on quarter. 24 much 1% on the year. that is the biggest annual fall since the series began in 1967. linda is with me and brian coulter joinses us, as well. just a quick reaction to those figures, linda, first of all. we're going to pay down debt. we need investment. >> yes. you have to have confidence and
you have to have savings. and so i think what this is reflecting is certainly tight credit conditions and also, a lot of this investment has gone into the sector which has suffered the most in this recession, which is clearly manufacturing. >> brian coulter is with us from fitch, as well. brian, when you see that figure like that and you're looking, of course, at a uk trying to put out debt plans, at the end of the day, growth is needed to repay debt and you don't just do that unless companies are able to invest. >> i don't think we're expecting to be at a stage where the private sector is going to increase cap ex at the end of 2009. that was always the later stage of the recovery, second half of this year. but it does show you just how cyclical investment is. the economy fell 5% last year in gdp terms. that's a massive number. investment is always much more volatile than gdp. >> we're going to get lots of
print to the latest debt to gdp numbers. we've also got standard and poors saying they may cut greek debt within a month. how material would that be if that happened in terms of costs? >> i'm not sure that's great news, to be honest. we've had a negative outlook since the downgrades were made in december. the interest rate costs, they're currently paying something like 6.5% on the 10-year bond. that is significantly higher than the assumptions in their budgets. >> would that materially impact that cost, do you think, or they're being driven by other issues, aren't they? >> a lot depends on the bailout. there's not one euro of actual
hard cash on the table. there is a safety being interpreted which is that if push comes to shove, the eu will support greece and i think that is probably going to be a more important indicator for investors in the very near term. i think the ratings are more about, you know, the fundamentals and whether they stay on track with this program. interest rates are higher than the original plan. >> brian, this is nicole lapin in the united states. we had back the back numbers this week. ordinarily, we wouldn't focus so much on them if they weren't that bad. what do you think is going the set the tone as markets are digesting fed comments and gdp revision coming in tomorrow? >> it was a pretty strong number and it wasn't just driven by cars. in fact, nondurable consumption
was strong. private sector investment grew kwooid quite rapidly in the nonresidential sector. so, you know, i think some of the tone of the recent concerns has been the recovery in the u.s. was part a recovery. and the numbers come out in the uk have been quite negative. the overall story of this recovery is going to be weak. it's going to be a bumpy ride. i'm not sure there's a dramatic rea r appraisal going on. the fed put the discount rate up last week. >> brian, good morning. this is chloe in asia. you know, the shaky global growth picture was something that was cited by the chinese district today. they said that the yuan rates need to be stable. they're saying the pick ups is something china has seen since
december is because of an inventory bounce and that they could be seeing a narrower trade surplus. wa do you think are the chances that we may hear anything at all about any renminbi appreciation perhaps in the near term, let's say three months, six months down the road? >> i think we're in the same old same old, really. china has never got its head around the prospect of a major appreciation of the r&b. all this talk that there's a massive rebalancing of the chinese economy so the chinese consumer has to start to lead world demand and replace the u.s. demand really doesn't add up. the one way of doing that to make consumers in china richer, the quick way of doing that is to appreciate the currency. they still have an export proeb approach to macro policy. i don't see it's going to are help the rebalancing. it's not companies investing in
capacity. >> brian, i want to take us back to this rating of greece because we know that spain is also now undertaking austerity programs and say the greek rating gets cut, so it's pretty close to junk bond stai sta status. what happens if they're close to junk bonds? theelt have a hard time offloading even guaranteed bonds in the next month. >> greece's problems to a larger extent reflect problems in greece. it's a homegrown issue. the greek economy the last five years grow about 4% per year in that period. they made no progress in getting the debt ratio down. the spanish economy also grew rapidly. they paid down a huge amount of debt. they ran down fiscal services.
solo they've had a big deficit in spain, the ratio is much lower in france, the uk, germany at this point. we don't see the container. it's going to be such a big deal. >> brian coulter, joining us from fitch. thank you for that. linda is sticking around. >> still much more to come here on "worldwide exchange." up next, akio toyoda, he was grilled by u.s. lawmakers for three hours. how did he fare? we're going to discuss that. but before that, a quick check on how gold is trading. we've secretly replaced these diners' at&t smartphones with verizon smartphones. let's see what happens. where are all my apps?! i don't know. this download's taking forever. is that right? what is this? where's my cool phone? so, don't dumb down your smartphone. choose the nation's fastest 3g network.
welcome back to "worldwide exchange." take a look at the hopping congress skyline. it's been pretty gray and rather moody. i'm not sure what's happening there. anyway, the temperature there, 27 degrees celsius. singapore, on the other hand, is brighter and sunnier as usual, hot and humid. let's move over to tokyo and check in on the trading day there and check in with asuka kondo. >> thanks, chloe.
the nikkei 225 fell 1%. the nikkei has learned that general electric aims to enter into a japanese smart street market by manufacturing smart power meters in japan jointly with fuji electric holdings. ge and fuji will likely establish a joint venture around october to develop smart meters for japanese power utilities. meanwhile, toyota motor fell 2% after opening up 2.2% on a relief rally following president akio toyoda's u.s. congressional testimony in which he apologized for the safety problems. but the mood soon soured after it was reported that three suppliers had been raided by the
fbi as part of an investigation into anti-trust violations. market players are cautious on toyota stocks while awaiting february auto sales figures as the firm's recall problems are ongoing. back to you, chloe. >> thank you. do have a great evening. let's talk more about what is happening with toyota with the director of automotive and transportation asia pacific, frost sullivan. first of all, before we get to what the mr. akio toyoda did and whether he was able to salvage the pr for the company, nissan recalling 76,000 vehicles for 10 models in japan. suzuki, 432,000. many cars in japan, die hat sue. just a few days ago, we had hyundai recalling some models because of a door recall
problem. is this something that we're seeing pretty much all over the automobile sector, just like the woes that gripped the likes of boeing and airbus? >> it seems like so, but there's a bit of reaction causing all this hype. it's actually not very high. if this news had come maybe six months ago, it would have just vanished. but i think with millions of vehicles being recalled, every single new vehicle that is getting recalled would, you know, create news. >> absolutely. and mr. akio toyoda testified for three hours. but i was watch some parts of it. but even seeing that, i think for most people, i don't think we have any more clarity as to what is precisely wrong. but i think for a lot of consumers worldwide, you're wondering if you have a toyota parked in your garage, you know,
am i willing to take my children, am i willing to take my parents or other loved ones in there. you're going to find like a bit of a skeptic especially given the pr, the campaign that they have so not gotten right so far. >> i think there are two issues to it. one is the pr part of it and the other one is the product part of it. i think pr part of it, we have to look at it from a cultural side. they come from a completely different culture, although it's a company which is in u.s., toyota itself, it comes from a japanese culture. he's like a prince in japan. i think if he comes out and says i'm sorry, according to him, it's enough. >> but would appointing america national as part of the senior management team, is that going to work? they tried that a few years ago, but that man left for ford. >> i'm sure they will try that and they will decentralize a few
aspects more. decentralize can come in terms of when to do the recall. to the local operations. on the other hand, they will centralize vendor control, vendor management, to have an accurate and tight control. so we would see a lot of turmoil going through toyota and the other part, which i was mentioning, the product part of it, if we have something like mr. toyoda coming out and saying, it's my sponltd and i'll do it, we are quite sure that this will definitely happen. right. >> presumably, though, it's a matter of time here. we've just -- it's got to be proven to consumers that they have put quality back at the top
of the agenda. and i guess it won't be until we get the new production vehicles out that we'll start to see whether that is the case, isn't it? so all we've got is time. >> i think there is one more step that will come before that and that is the majors that they have announced. i think one major that they have clearly said is they would have an independent assessment of what went wrong. if that is done, the reports come out, then that would be one step. having a new vehicle, trying to prove it, it's really very far. before that, they would assure us some road signs as to how they're putting quality back on track. >> this is nicole lapin in the united states. what would those road signs necessarily be? we hear the mea culpa. you said it was a cultural difference and that was a big step for him to come out to congress and even admit that he
was wrong. but moving forward, are we expecting more in the future or is it going to be product focus that's going to try and move the company forward? >> knowing toyota, they would focus on the product and the safety issues. once they encounter a problem, they go and correct the system so that the problem doesn't recur and that's precisely what they will do and what is what is required. unless you correct the product at back end and start delivering what you promise, it won't work. so i think their focus would be mostly on correcting the product and let the product do the talking. >> we've got to go, but there are numbers being floated around, minus $2 billion, but that's only for the end of the fiscal year, which is in march and that the figure doesn't take into account the recalls, including the likes of lexus. do you have any idea how much this is going going to cost
them? >> it's very difficult to calculate cost of this unless we, you know, have electric behind. it will come from loss of sales, models which are not impacted, so it's very hard to calculate it. >> thank you so much. thank you so much for your comments there. vivek vivda at frost & sullivan. of course, linda yueh is still with us over in london as our guest host for the full hour. let's move over to mumbai and check in on the india business report with ayesha faridi. ayesha, a pretty lackluster session that you have over there. >> yes, indeed. and for a fourth day in the running, chloe, it's been extremely quiet. the big event is the union budget. it has gone absolutely quiet. it's sort of a wait and watch approach, really, as we step
into the big event. no signs of volatility, as well. it's a very narrow 20 sort of band. the nifty has been hovering in and absolutely flat for the sensex, just about 9 odd points up for the green at 16,267. today was the economic survey, which was actually tabled in the parliament, a couple of key pointers there and the key case in point which really seems to be the concern for the economy going forward into growth, really, that seems to be the withdraw of stimulus. so there has been a mention of that in the economic survey, which goes on to say that recovery creates scope for a gradual rollback of stimulus and there has been key emphasis in the word gradual, so definitely, there will be a roll back but perhaps it's staggered. that is what the analysts or the economists really on the streak are picking up. the market refuses to budget or react to any announce wantments.
the gdp target, 7.2% is the gdp target. 8.5% is the kind of growth that the economic survey mentioned, plus minus quarter percent in fy11. that is pretty much in line with what most economists had expected, most brokerages were taking a call of anywhere between 8% to 8.5% growth for your fy '11. thank you so much, ayesha faridi in mumbai. hope to see you again very soon, possibly tomorrow. and let's turn to mr. adam bakhtiar for the other markets. >> it was a negative session for most of the markets, but the shanghai composite managed to close up in the green today. up 1.25%. once again striking off liquidity tightening fears and bargain hunting in the equity market, particularly in the
banking sector and scooping up stocks that many feel have been priced in. so we did see a positive session across the banking stocks. bank communications, yet yesterday, saying they were going to raise 6.1 billion both in shanghai and hong kong. that stock managed to rebound to close a little bit higher. take a look at the steel sector. this is one we'll be watching all day for the very reason that the steel trade managed to close up in the green. the nikkei business data saying they will be doing so by 20% earlier in the week. we have steel manufacturing hiking prices and china steel in taiwan are raise prices. not so in china. take a look at the steel plays. most of them closing down here today perhaps on fears that the u.s. commerce department is now flapping these duties on steel prices by 11 to 13%. this could strain the u.s. china
trade relations a little bit more that is already quite a bit on of a problem there. so we did see some softness in that space. moving on to the korean equity markets, that one buckled under pressure certainly today, down by 1.6% here on ongoing fears about potential downgrades that we could see in greece's sovereign ratings there. we saw some very soft picture across the board for the technology stocks dragging off the gains we saw in wall street. later today, the shareholders and creditors saying they're looking to sell their shares. 13% of it potentially in a block sales. this could come under more pressure tomorrow when it does react to this story. back to you. >> thank you very much. and i'll see you again very soon. let's get out to linda over in london once again, of course. our guest host for the full hour as we are running out of time. linda, adam was taking us through what happened in the shanghai markets today. and what i want to ask you is that a lot of investors over there in china are getting ready
for small doses of margin trading and index futures. that would be launched, perhaps, in a matter of a few weeks. some people are saying, initially this could be a really good market positive because you need to go long. but once that phase is over, there could be a lot of volatility. how do you view this? >> it depends if they bring in the ability to short the chinese stock market, which is also in the works for the next few months. they're also talking about exchange-traded funds. so i think if combination of some derivatives trading, futures, ability to short should improve, as well as i should say the intents now to make the entire stock market tradeable. so that should generate liquidity. unlike in most markets, this should stabilize the chinese stock market. >> linda, always great to have you with us on "worldwide exchange." linda yueh, economics fellow at oxford. still much more to come. we're going out now for a quick break. well, it is on earnings bonanza
welcome to "worldwide exchange." in the united states, the spotlight shines on key economic reports. ben bernanke is back on the hill. meanwhile, hurp in europe, banks are dominating the economics picture. credit agricole says it's upbeat for this year. >> here in asia, toyota's president says he is deeply sorry for safety lapses and promises to change the way complaints are handled. >> great to have you with us here on "worldwide exchange." welcome tort stat of your global trading day. let's take a look at how u.s. markets are likely to open, lower across the board. they have been narrowing in the past hour or so. about 18 below fair value.
four below fair value. ross, markets are digesting after a bump yesterday. investors assured that easy money was here to stay, but they're also turning to capitol hill to set the tone again today. >> yeah. of course, the easy money here in the states because of the economic outlook, isn't it? so there's two ways of looking into that. two hours into the trading day here in europe, markets have been fairly flat. ftse 100 up 0.4%. 0.6% up for the xetra dax. cac 40 up 0.2%. there have been concerns this morning about s&p is that they might downgrade greek debt a little further. we've had a little bit of euro zone data out this morning, as well. the economic climate, the business climate index, what we just got out. the economic composite confidence, consumer confidence, minus 17.
january it was minus 16. as expected according to the consensus forecast, industrial confidence minus 13. again, pretty much what we were looking for. the economic sentiment, though, fas has fallen for the first time since march 2009. phillip malgram is with me. we saw these confidence figures just starting to turn downwards. when you're in the united states or you're in europe, is that concerning you? >> request well, yeah. consumer confidence is a fairly weak data point, right? it's driven by headlines. but the headlines are not good. you know, when you see the greek authorities having to use tear gas to manage the public as they begin to understand the true cost of the debt they've incurred, it's not surprising consumer confidence starts to wobble a bit. >> yeah. the other thing i wanted to talk about was the company earnings that we've got coming out. the banks are coming out saying, look, the worst is over.
just put in the fact that his stocks as an asset class seem to be quite fairly valued compared to anything else. but is it enough to make you want to dive in? bearing in mind you've got these concerns about the broader economy. >> yeah. well, and my personal view for, i don't know, maybe the last 18 to 24 months has been that it's not a question are you in stocks or out of stocks, which ones do you want to hold? these are stock pickers' markets. these are ones that you want to figure out which companies have control over their margins and have genuine cash flow in spite of the amount of debt that's been incurred in the world economy. so yeah, i'm all for equities, just not all of them all at once. so i think, you know, that's the key. it's a stock picking market. >> just quickly, phillipa
malgren. you say it's a stock picker's market and you say we're going to see more government involvement in the market. but you're slg also saying look ahead for more taxation. >> absolutely. globally, we know governments, whether it's the national authority or the local authorities, the regional authorities, they're all out of cash and they need to find ways to generate more revenue. you know this is going to come in the form of more taxation. i would be particularly focused in property in terms of what would happen with hospital taxation because that's one asset that's hard to move. in addition to that, governments are going to get more involved in market economics. i think the government playing a role in the price levels for medical insurance tells you what the futures holds is governments are going to try and have a greater say in the actual price. for me, that's a worry. it tends to be an inflationary
impulse, by the way, in the economy. so i think we have to pay a lot more attention. the relative balance of power between states and markets is now fundamentally shifted in favor of the state and market people need to be paying much more attention to that. it's not just about bailouts any more. >> phillipa, good morning, this is chloe in asia. you were just talking about the property sector. in some parts of asia, there seems to be growing consensus that there are definite asset bubbles. where are you finding value given the strong run up that many of the markets have had? >> well, i personally take the view that we have inflationary impulses in the world economy. now they're coming primarily through the commodity chain. so anything you extract out of the ground, whether it's agricultural, energy, mined assets, so in terms of equities, what i'm interested in is where will this cost be allowed to pass on to the consumer?
so for example, the cadbury/kraft deal has a lot to do with the idea that you want to acquire a brand that pirmts permits you on charge a higher price. i think other companies, it's going to squeeze their margins and those you want to be relatively short. in terms of property assets, i think you want to look at places where there's going to be an inflationary impulse in the economy. australia is a very case in point where they put an enormous amount of stimulus in an economy that turned out to be what they needed because they didn't have a financial crisis. so now they've got a bid on hard assets in the economy. you can see it in the mining stocks and you can see it in the property. >> phillipa, stick around. plenty more to talk about. let's run you through some of the other news here. standard & poors said another
ratings downgrade for greece is possible. a ratings downgrade could come as the government lost support for budget cuts. thousands took to the straights again yesterday to protest against austerity measures. and just a minuat the same time to the bbc, it was says germany had to right to criticize greece for anything after it devastated the country under the nazi occupation. he said they took all the gold from greece during the second world war. they concluded that the eu leaders are very poor quality and not up to the task of managing the fortune of the eu. pippa, he very extraordinary comments. >> emotions show when the burden of debt is so powerful. and the bottom line is, i don't
think why the markets think that the german public is going to bail out the greek public. it's not going to happen any more than the abu dhabi authorities will bail out dubai. there will be major i didn't knowal euros thrown in here and there to slow down the base, but it's a fact. >> you heard it here. we'll pause there. nicole. fed chairman ben bernanke is back for another round with lawmakers today, giving part two of the semi-annual testimony on the economy and monetary policy. he goes before the senate banking committee at 9:00 a.m. new york time. economists believe that since the u.s. housing and job markets haven't improved much and consumer confidence has worsened, bernanke will avoid mentioning the timing of a rate hike, per se, but he told a house panel yesterday that rates will continue to extend lower for a continued period. president obama is squaring off with lawmakers today in a last ditch effort to salvage his health care reform plan.
the president will host more than 40 democrats and republicans at a historic blair house. the nationally televised six-hour event begins at 10:00 a.m. new york time. leaders will discuss controlling costs, insurance reforms and cutting the deficit and expanding health care coverage. chloe, we will be watching. >> here in asia, india's finance ministry says the country needs to start fiscal consolidation beginning in april by reforming spending, eliminating its revenue deficit and putting a cap on government debt. the economic report was presented in parliament ahead of friday's general budget. the ministry has forecast gdp growth to hit at lye least 8.25% in the 2010 fiscal year from the projected growth rate. >> still to come, rbs posted lower than expected net loss. more details in our global stock watch.
the bond issue will be well thought not because of investors confidence, but because there is an easy return to be made. a portfolio manager sells cnbc you should think about investing countries that are more sensitive to the u.s. economic recovery, like south korea, for example. he sees the country as the best value market in asia. plus, at a time when unemployment is high and the job market is tight, a cnbc contributor reveals the central will make the decision to make or break someone from senior leadership. read more from cnbc.com.
>> and there you go, brent losing team at $77.79. currently both prices, brent and nymex below $80 per barrel. >> and as far as global equity markets can concerned, let's bring you up to speed with where we stand. becky is with us for some of the corporate news. there is a lot going on today. >> the biggest thing is rbs. the shares are coming out and looking really strong to add a little bit of ground today. shares of rbs are up by over 7% now. lloyd's is gaining in today's session, too. that is coming out with earnings tomorrow. as far as today is concerned, though, rbs came out with a loss for 2009, but the operating loss
didn't narrow fractionally. 6.2 billion pounds there, saying that bad debt may have peaked, as well. in terms of the strength for investor banking, seems to be a bit of an upside for this country. they're cautiously optimistic, but they see a year of hard slog ahead certainly enough to increase the stock of rbs. patricia, how is it going in germany? >> not too bad. basf really spearheading today's gainers, reason being that they're very optimistic for today's numbers. so that stock is up almost 5%. rba coming through with their numbers. better than expected, however. the outlook is quite different. they expect a significant drop in gas and electricity prices going forward. this is why the stock is trading down about 2%. in a couple of minutes, i'll be off to interview the cfo of deutsche postbank. now, deutsche postbank is germany's largest retail sales
bank. we'll talk a little bit about their risky investments, especially when it comes to the commercial property, deutsche postbank, as you can see, flat lining. numbers more or less in line with what we heard last week. all in all, it's a better afternoon so far. back to you now, stephane. in plenty of earnings out of france this morning. credit agricole returned to profit in the last month of last year. however, numbers were slightly below expectations. the banks say all operations are performing well based on the early indication for 2010. so that is positive news. the other one regarding greece, credit agricole says that its greek unit is not concerned by the country's debt problem. credit agricole has no plans to sell it. france telecom, below expectations for the next year.
but the company confirmed its financial guidance for this year. revenue would be flat. the target of 8 billion euro free cash flow have been consumed and it will stay at 12%. and next monday they will have a new ceo. let's find out why with adam in singapore. >> to some degree, the mounting problems with greece's fiscal woes did weigh on sentiment given ta that country could face further ratings downgrades. but in japan, ended the day softer. the exporter stocks in the red, particularly the autos and the electronics consumer stocks here very much because of the yen strength versus the u.s. dollar and hitting a one-year high versus the euro on the back of
these problems that greece is facing. with the orders, we're watching shares of toyota all day following testimony by akio toyoda which was very emotional for him, indeed. basically, he's reaffirming that the company is at a crossroads and they need to look at how they do things in general after a recall of 8.5 million vehicles. just minutes ago, we got more news out from the other automakers, nissan, dihatsu and suzuki all recalling vehicles. so we'll get the reaction tomorrow after shares are back up and trading. good morning. >> good morning to you. thanks so many. and still much more to come on "worldwide exchange." do you think the euro will suffer long lasting damage following troubles in greece? or will it recover as soon as those concerns go away. e-mail us. i am checking this e-mail box constantly because we have a panel coming up right after the break and we want to post some of your question bs to that.
welcome back to "worldwide exchange." it is 5:20 on the east coast of the united states. let's take a closer look at how markets are likely to open. lower across cross the board and have been for the last couple of hours. dow futures are down about 20 points below fair value, nasdaq futures down about 6 points
below fair and s&p 500 futures down about 3 below fair value. coming after a spike yesterday, dollar got a bit of a bump following some supports for stocks, as well. so u.s. investors getting jobless claims, as well. demand for big ticket items expected to jump 0.1%. sandra pianalt ob will be speaking in dayton, ohio, at 8:15 this morning. at 1:15, st. louis fed president bullard will be speaking in texarcana, texas.
blackstone will be reporting figures today along with dr. pepper snapple, heinz, kohls and newmont mining. on the other coast, appearing is holding its annual shareholders meeting at its headquarter k in california at 1:00 p.m. investors will get the chance to hear from ceo steve jobs, tim cook as apple, of course, gets ready to release the new ipad device. ross is already on the waiting list, i know that. >> oh, you know me so well, nicole, after just a short period of time. >> thousands took to the streets yesterday and the impact of the euro hit a one-year low against the yen. but against the dollar, it's been fairly muted this morning. but a lot to do with the post fed testimony. how do we assess the euro zone
versus the u.s. for investors. still with me in the studio, phippa malgrem. julia, with the euro debt's debt problems, it was easy to buy the euro and buy the dollar on the basis that yields in the u.s. were going to go up and we were going to have interest rates higher. post yesterday, we've lost the u.s. argument that yields are going to be higher. >> the fact is, the united states, in our view, is continuing to print some good economic numbers. you particularly saw that with the gdp numbers, but q3 and q4. in contrast, the euro area seems to have faded on the gdp side and we have these mounting problems coming through with the sovereign debt crisis emerging
in greece and the risk for that is going to spread to other countries in southern europe. but my point here would be simply that academic studies would continue to suggest that there's a fundamental value, really, for dollar/euro. quite simply, the euro is quite strong here. the ecb hasn't done enough to bring it down. but now i think the numbers will gravitate ultimately to that view. >> david, it's a relative gain here, david. and, you know, before the fed, we were pricing in much -- have we changed our view on u.s. yields post what we heard yesterday? does that change the game? >> well, i think so, in a way, because markets were getting ahead of bernanke. and bernanke made et very clear yesterday that they're going to be in this very low interest rate easing mode, nearly the
rest of this year. probably all the rest of this year and possibly well into 2011. because the u.s. economy is -- while julian is optimistic about the u.s. recovery and to some extent, i agree with him. but tlibl is a fragile recovery here. commercial real estate is at the moment unraveling. and there is a lot more of that to come. u.s. housing, residential housing, which at one point contributed 3.5 points to gdp, is under one point of gdp and it is still wounded. so i don't think we're out of the woods so easily here and that robust recovery notion is now out of these markets. >> phippa, who is right, do you go with fundamentals or do us we're not out of the woods yet? >> i would say we're going to have mixed signals for some time
to come. one of the things i'd like to ask these guys is what about the gap between chairman bernanke says we're not going to raise the official interest rate for as far as the eye can see. but meanwhile, the mortgage backed security measures, the kwan tafb easing measures, those will be withdrawn. so you can say with a straight face, you interest rates aren't going up. >> julian and then david. >> i think that's an important point. i don't know that investor have fully taken on board yet that the fed is going to stop the asset purchases and then, of course, looking to disengage itself from these emergency measures that it's been undertaking. i think that is yet to really hit the markets and that could well be a factor that tends to support the dollar. mean what time, the ecb is very much boxed in. we'll know more thursday next week with the pretty korns. but it seems to me likely that the ecb is going to undertaking over timid steps in terms of any
further exit. they really can't afford to upset the apple cart here. >> i'd agree with julian on the ecb completely. they cannot do anything but stand pat for the next several months and let the debt crisis run its course. here in the u.s., though, it's not clear how much of a backup in mortgage interest rates is going to occur when the fed backs off the program, which is destined to end in march. and the tax credit on housing expires. we could really go into a second round housing slump. the foreclosure rates are rooid rising and fannie and freddie are now under the new accounting rules. so we've got a lot of volatility volatility in the mortgage finance sector. if it's really bleak, the fed could put on an additional program. if it stabilizes, they won't. and we don't know how that's
going to react. so the range in estimates on changes in mortgage rates runs from zero to over 100 basis points, a monumental gap that will be resolved only with time. nobody knows for sure. >> david, pip, you're going to stick around. julian, thank you so much for your time. mg up, it is day two of bernanke's testimony on the hill. he insisted yesterday that interest rates will remain low for a long period of time. what is he likely too nouns today? stay with us. hi, may i help you? yes, i hear progressive has lots of discounts on car insurance. can i get in on that? are you a safe driver? yes. discount! do you own a home? yes. discount! are you going to buy online? yes! discount! isn't getting discounts great? yes! there's no discount for agreeing with me.
welcome to "worldwide exchange." ben bernanke is back on the hill and president obama's high profile summit are happening in the united states. >> meanwhile, rbs posts a loss but says the worst may be over. and credit agricole is also upbeat on 2010. >> in asia, toyota's president says he is deeply soeft for safety lapses and promises to
change the way complaints are handled. >> great to have you with us here on "worldwide exchange." we'll take a quick look at how u.s. markets are likely to open, lower across the board for much of the morning with a bump that we saw yesterday, pull back in the dollar average a spike for support values for stock. nasdaq down about 4 and s&p 500 futures down about 3 at this hour. ross, what are you guys giving us from across the pond? >> well, we are off just a little bit. an hour into trade, we are absolutely flat. here we are two hours into trade. flat for the german -- for the swiss and french markets. it's all individually about the earnings today. and banks are actually doing a little better. rbs, credit agricole, some disappointing numbers out this morning. but a lot going on as far as the currency markets are concerned, chloe. >> a lot of negative sentiment
and risk aversion hitting the forex markets at this moment. a lot of risk averge going on between the dollar/yen. the euro against the u.s. dollar at 1.35. sterling is quite weak, as well. sterling/yen at a -- sorry, sterling/yen at an 11-month although at 1.3686 and sterling/dollar at nine-month low, as well. another cross that is interesting is the euro/yen at a one-year low. >> joining us live again, david kotok. i'll take it from here if you don't mind. still with us, our guest host, phippa melgram. david, i want to start with you because we were talking about the fed in our last segment. not a lot of clarity coming out of fed chairman bernanke yesterday. but when do you think the market is going to start reacting when they start carrying out reverse
reboots, start taking other steps? is that when we're going to see it? >> well, we may see, but bernanke is trying to send a message. and he's repeated it several times. and the markets are not focusing on it clearly. they're focusing on the asset side of the balance sheet, the blowing up of the assets side with the $1 trillion plus mortgage purchase. they're not focusing on the liability side of the balance sheet or the federal reserve, which is the reserve deposits and the interest on reserves and that is a tool which is new in the united states. it is being applied for its first time. if the fed manages the reserve side, they would be able to withdraw the asset side stimulus and neutralize it, sterilized, and it will not have this huge inflationary effect that everybody is fear mongering about. it is quite clear that that is
fed policy. it is not clear that the fed has communicated it clearly. i believe if you're a monetary economist, you can see how they can do it. but they vice president explained it enough. they're trying to keep doing so. >> well, i want to switch gears and try to get to the ramped up tensions between the u.s. and china. and putting your former economic adviser to president obama hat on for a moment, what do you make of these comments at a commerce ministry spokesperson saying that the u.s. should not blame problems on other countries, especially china's currency policy. we're getting more and more ramped up rhetoric here. >> this is a critical issue. and when chairman bernanke gives his speech, we have to think about how do the chinese perceive it being the principal
holder of u.s. bonds. and i think the bottom line is, the strategic security issues between the united states examine china have become much more important. i see today in the headlines china formally announcing suspension of joint military exchange. why? it's in part because the chinese government feels, number one, the fed is telling us they're not worried about inflation. but we're worried about inflation. and second, that the fed is telling us we have to change our currency level. we've got to raise the value of the renminbi, which is to say china has to pay the price for america's mistakes, which they don't like. of course, in the u.s., we take an opposite view that the problem wasn't caused by a two week level of the renminbi. finally, i think it's important to understand that the u.s. and china on strategic security issues, they are in competition for things like control over cyberspace, recall can over space. so how capital gets deployed is an important question. the chinese are basically
saying, we've been spending it buying your bonds for a long time because in exchange you bought our product. now you're not buying for ten different reasons and frankly, we would like to have greater control over our national security and our capital is going to move a little more in this direction. and it's a negotiating tactic as much as a bottom line fact. >> david. >> i think there's an issue when we rachet up sentiment. whether it's tires or electric blankets or anything else, what we do is raise the trade tension. we threaten or impose a cost or a barrier. that dmindishes the value of trade. and it makes it not only more costly, but it creates barriers and a psychological expectation of another barrier. for the behavior in the united
states and the obama administration is an error in my view and it will come back to haunt us. it's a mistake. we don't want to have a trade war with the chinese and we don't want to have military confrontation with the chinese. we want to have an open, globized economy. it's better for them, it's better for us. >> davidco tock, chairman and chief investment officer ott kumlerland advisers and phillipa is our guest host on this hour of "worldwide exchange." coming up, we're to bring you an interview with the president of toyota. find out more about his thoughts on the carmaker's problems. take a quick check on how oil is trading as we run out for a quick break.
speaking to employees after the u.s. hearings, an emotional toyoda thanks them for their support. >> at the hearing, i was not alarmed. you and you -- across america and around the world. but they are with me. >> mr. toyota pledging to overhaul the way toyota, the company handles complaints and car recalls going forward. he dismissed concerns about any fault with the company's electronics system saying he was absolutely certain there is no design flaw. of course, that congressional hearing is probably not his last. and cnbc's phil lebeau got a rare chance to speak to akio toyoda in washington and began by asking how he thought the hearing went. >> honestly, i feel a little tired right now and it was an opportunity to answer to the questions of those by the
congressman. however, i thought it was a great opportunity for me to communicate with people who use our vehicles through the camera in this country and the rest of the world. what i really tried to do very hard today was that we have been working in this country for 50 years and we really try to do it for the betterment of american people. and we were working very, very hard sincerely to that end and i tried to express that from the bottom of my heart. i'm not so sure if that was conveyed, but i hope that i did a bit of that. >> let me follow up on that. do you feel as though you convinced the skeptics in congress or in washington that that toyota has fixed the problem behind these recalls? >> translator: i believe that i was able to tell everything we know at this point in time. however, when it comes to this unintended sudden aberration, i believe there are basically four
possible reasons behind them. and one is related to the electronic throttle control system. secondly, it may relate to the structure of the vehicle. thirdly, it might relate to the way people use the vehicle and fourthly, it might relate to the parts and components. with regard to the electronic throttle control system, we are confidence that there is really no problem in our design. and the fail-safe concept is well incorporated into it. however, having said that, i know there have been problems and we are in the process of trying to find out what possibly could have convicted to currencies problems. we have been working hard before i came here and yet we were not able to recreate or reproduce what may have happened on the roadways. so we wanted to say that our view -- now, i am not so sure as to what extent they understood
what i was trying to convey. but at this point in time, we would like to work with other people in a very open manner and find out what is the cause of the issue and i have this renewed sense of willingness to really pursue this today. >> you mentioned the electronic throttle control. you have been unable -- and i say you, toyoda, but the outside experts, the firms that you've hired, your own engineers, you've been unable to find a definitive problem. yet, at the same time, if i'm understanding what you just told me correctly, you acknowledge that there is the possibility that there may be a problem in the electronics. does it worry you that there seems to be a disconnect there? you can't find a problem, yet there may be a problem? >> translator: well, it's not that i have any sense of skepticism that there may be
possibly an issue. no, that's not what i'm saying at all. given at the level of present day technology and we have tried everything we possibly could and i can state today that vehicles are completely safe. having said that, there are many different ways in which vehicles are utilized. there are many disht people who use vehicles in their own way. the duration of the vehicle may vary. it is possible that certain economic phenomenon may present themselves. what i'm saying is through dealers, we would like to continue our efforts and try to move along with the changes or -- and then farther improve our vehicle. >> and you can catch phil lebeau's full interview with mr. akio toyoda on cnbc.come. just looking at toyota, what's the lesson to be taken
away from this, do you think? >> well, the you know, how ironic that the one company that was gaining market share through the fm crisis period and the downturn and that is with a issue and i'm surprised in what he said. i think what i heard is that drivers may have caused the problem rather than the cars, but we'll leave it for the public to interpret what he had. but the one thing he may have said this morning is a renewed conviction about volatility. volatility is the play. so don't take the direction of -- you can't be directional from this year? >> well, i think particularly in the bond markets, volatility will reward you rather than having a directional view. your probability of hedging at the right moment is not great when tear gas is involved. in equities, i come back to cash flows. it's not country webs it's cash flows and where are they? and my personal view continues to be if you apply this severe pressure to the u.s. economy, the kind of pressure that
chairman bernanke is talking about in his testimony, you will get innovative out of it. and so i'm very optimistic about the innovation response that we're going to see. >> phippa, just a quick question off that volatility idea. with all of this volatility, do you think there's going to be an inflexion point in the near future? >> i mean, i have been waiting for the markets to, you know, response to the european debt problem. right now, they're focused on one country, but there's a whole queue along the line of countries that have exactly the same problem as greece. for a while there, the driver was the dubai story. that's not over. that will come back. globally, we're going to see as governments withdraw liquidity from china to the aye u.s., this is going to begin to reveal which assets bear a burden of debt that's unsustainable.
so for me, i think it's the slowest train wreck that i've ever seen, but for a lot of people, it's a surprise that you can't sustain this kind of debt burden without the market price moving a lot. >> some will even say even a slow train wreck is still a train wreck. phippa, thank you so much for staying with us for the entire hour. stay with us on "worldwide exchange." much more to come. we'll look ahead to the day on wall street. what's likely to move markets? are we talking ben bernanke, jobless claims, durable goods data? stay with us.
"squawk box" is up in just over nine minutes. carl haas moved down to washington where he's going to be hosting the show today. hey, carl. >> sounds like -- >> if he can hear me. carl, can you hear me? are you up and running? i'm not sure he can. we'll try to get down on carl. anyway, that is where the program is coming from. >> all right. very good. it looks like carl is having
some fun over there in washington. let's bring in david kotok for a little bit more fun. he's actually in sayre so ta, florida, right now. and let's talk about what carl is about to cover. it's this huge health care summit in washington today. this is a six-hour long event with the president, democrats and republicans. >> it's a huge issue, a manu mental issue and it involves so many emotional parts and political parts. the monetary economic debate is over who pays who, so somebody has to pay it and somebody gets the subsidy. that's the politics of money side. the politics of appealing to people on health care in general terms and then trying to bring it into some legislative program is incredibly difficult and the president has staked his
reputation on having some success in health care of some type. so far, he doesn't have it. there's a political impasse. and it's hard to see how they're going to create a consensus and achieve any kind of a bill which has substantive change. it doesn't look like the country wants the substantive change. and that is one of the reasons the politics are so intractable. >> it seems like a political hot potato. but who wins and who loses in this debate? >> well, it depends on who pays and who gets and we don't know how that is going to shake out yet. that's a great question without an answer. i will say one thing about markets. the health care sector, biotech sector was discounting tend of the world at the height of the health care bill battle. that has now improved. because what we know is for the purpose of investment, development, health care,
biotech, research, the worst case is not going to happen. something less than that is going to happen. and so those stocks are relatively cheap and they will show it over time as this bill continues to develop. so from a markets point of view, we're going to get some resolution. >> and when are we going to get that resolution, do you think? you say that the recovery is soft, but it's not yet robust. >> i think you're right about the not robust. but a resolution in the health care sector has to come where in a political year, we've got an election in november. the economy generally is fragile. the recovery is fragile. it will be so for years, not weeks or months. the employment situation has a very long workout period and there are large sectors in the employment cohorts, single moms, the unemployment rate has doubled, college graduates,
unemployment rate has doubled, one out of 20 cannot find a job. these are massive numbers. big shifts. they require a great amount of time to absorb and stabilize. it doesn't happen fast. it won't happen fast. >> david, if i can get out to you, you know, yesterday, i think markets and investors worldwide were on edge as to what ben bernanke was depending to say. he continues to speak today. do you think there will be any surprises at all? >> i don't know about surprises. i hope he reinforces this notion and explains in greater detail so he can face understanding how the reserve deposit tool can be used to neutralize or sterilize the inflation threat from the asset side of the balance sheet.